Pakistan’s inflation rises to 7.2% in October, exceeding official forecasts

Higher-than-expected CPI sparks interest ahead of central bank policy review

Pakistan’s headline inflation rose to 7.2% year-on-year in October 2024, up from 6.9% in September, according to the latest data released by the Pakistan Bureau of Statistics (PBS) on Friday. 

The month-on-month Consumer Price Index (CPI) also showed an increase, rising by 1.2% in October compared to a 0.5% decline in September.

The increase pushes the four-month average CPI inflation for FY25 to 8.68%, down significantly from 28.45% during the same period in FY24. 

However, this October inflation surpassed official forecasts, with the Ministry of Finance previously predicting a range of 6-7% for the month and a further decline to 5.5-6.5% by November.

With inflation now trending slightly above expectations, attention turns to the State Bank of Pakistan (SBP) and its upcoming Monetary Policy Committee (MPC) meeting on November 4. 

In its last review, the SBP made a sharp rate cut of 200 basis points, bringing the key policy rate to 17.5%, citing easing inflation and reduced international oil prices. 

The current inflation uptick could influence the central bank’s policy outlook.

Brokerage firm Arif Habib Limited said, “The MPC is set to meet on November 04 and we anticipate a further rate cut of 200 bps, bringing the total reduction to 650 bps.” 

Breaking down inflation by region, urban CPI inflation held steady at 9.3% year-on-year in October, identical to September and significantly lower than the 25.5% recorded in October 2023. 

Monthly urban inflation increased by 1.1% in October, matching last year’s rate for the same month. 

Rural inflation, however, rose to 4.2% year-on-year from 3.6% in September and 28.7% in October 2023. 

Month-on-month, rural CPI rose by 1.5% in October, up from a 0.5% decline in September.

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